The crypto market and blockchain-enabled technologies are rapidly evolving and providing new types of value propositions. As the crypto market matures it will be essential for investors to diversify their crypto holdings, as many protocols are now contributing to the space’s growth and value. The nascence of the space makes it difficult to analyze which protocols provide true value and have sustainable tokenomics.
COSIMO Y’s fund managers have extensive experience and knowledge in the sector, providing you with a risk-managed solution to hold top protocols while earning staking yield.
The Evolving Crypto Market
According to the International Monetary Fund (IMF), which advocates for stricter regulatory methods, the cryptocurrency market was estimated to be valued at approximately $2.5 trillion in 2021 but has fluctuated between $3 trillion and $1 trillion in 2022. This market value and respective volatility have prompted policymakers to consider more regulatory control over a system that was and continues to be, forged with a primary aim of decentralization. However, increased regulation does not have to be at odds with decentralization. In fact, many investors believe that creating a safer and more transparent market with comprehensive and enabling regulation will actually expedite mass adoption, especially in decentralized applications and services. The rise of these decentralized protocols delivering real use cases, utility, and yield, is largely enabled by an industry-wide transition to proof-of-stake blockchain networks.
Bitcoin requires a protocol to have consensus amongst nodes in the network because it’s a decentralized network, but because it was an early use case of the technology, it wasn’t the most efficient and scalable solution. Furthermore, it wasn’t the cheapest nor the most environmentally friendly. But as the technology grew and more people were onboarded, it became more and more difficult and expensive to scale. If you want mass adoption of the technology, you have to overcome those limitations. That’s why Ethereum, which used proof-of-work, decided to take a two-year journey to proof-of-stake.
Staking has become one of the most valuable alternatives to proof-of-work, not only in retaining cryptocurrency value but also in energy use, cost, speed, and retained decentralization. Proof-of-stake uses up to 99% less energy than proof-of-work, and seeing as validators have a personal interest in being honest in their assessments, there is less chance of dishonest validators skewing the assessments in their own favor.
What’s the best option to invest in?
According to Dan Morehead at the Bloomberg Invest Conference in 2022, “The important thing to stress for investors is, there was a time that Bitcoin was everything and all you had to do was put your money in Bitcoin and that was it. Then there was a time you put half in Bitcoin, and half in Ethereum and you were fine. Now a huge amount of value creation is coming in other projects and it’s not surprising. There wasn’t one company that became the internet, there were a lot of important internet companies. There will be quite a number of important protocols.”
COSIMO Y: Diversifying risk for large-scale institutions
As an answer to the doubts surrounding the erraticism of the industry, COSIMO Y offers investors and institutions the chance to receive risk-managed yield while supporting blockchain networks without having to constantly worry about an industry that rises and falls at any given time.
COSIMO Y is a risk-managed digital yield fund working across proof-of-stake protocols. The fund is focused on providing a seamless, secure, and transparent platform with a diversified stack of custodians, validators, and exchanges. The funds experienced managers protect investors against downside risk with systematic hedging strategies while allowing investors to remain in the market and receive staking income.
The core of the platform is transparency, security, and protection of downside risk. The institutional grade platform works alongside well-identified core partners who are leaders in the digital asset industry and are well-able to ensure that large institutions can be onboarded with ease, as well as with respect to their own preferred risk profile.
The counterparty risk in proof-of-stake is the blockchain itself, so fundamentally there is no overt reliance on any centralized party. However, there remains support for investors and institutions through fund managers who are well-equipped and knowledgeable enough to ensure that no unnecessary risks are taken and that the desired risk profile is abided by without disadvantageous profit potential.
While the erraticism of cryptocurrency market capitalization in 2022 may scare off many investors, it’s worthwhile to consider the potential of the industry, especially as it returns to the values which first made it so attractive. It is also these fluctuations that highlight the need to diversify holdings, as well as how proof-of-stake may ameliorate the concerns which have become more prominent in the past couple of years.